Click a tile to open it, 'X' to close it or check the circles to create a custom PDF

SAVE THIS ARTICLE

Healthcare- Health trend stimulates consumer spending

Four of the five healthcare brands ranked in the BrandZ™ China Top 100 declined in value, producing a drop of 12 percent in the value of the category overall.

Although retail sales for both Chinese and Western medicines increased 9.3 percent for the first 10 months of 2018, according to China’s National Bureau of Statistics, other factors, including changing consumer attitudes and the fluctuating cost of ingredients, pressured performance.

By-Health, a marketer of vitamins and supplements, increased in value. Added to the ranking last year, By-Health implemented an e-commerce strategy with branding and communication designed to appeal to young consumers. It also acquired a children’s nutrition brand. By-Health is the only healthcare brand in the ranking that is not state-owned.

Healthcare brands that declined in value included Yunnan Baiyao, a well-established market leader, along with the traditional Chinese medicine brand Tong Ren Tang, established in 1669. Pharmaceutical giant, CR Sanjiu, and Dong E E Jiao, which specializes in health and beauty products made from extracts derived from donkeys, also dropped in value.

Government reforms have improved the country’s healthcare system over the past several years, but also created some disruptions, according to Kantar Health. The reforms focused on three areas: quality, affordability, and elevating China’s stature globally as a pharmaceutical producer.

To improve quality, China accelerated the entrance of new drugs into the country by shortening delays in the clinical trials process. It has also focused intensively on regulations for generic medications to ensure that the efficacy and safety of the generic version matched the standards of the original drug.

The availability of more generic drugs also was part of the government’s strategy for improving healthcare affordability. The prospect of greater affordability prompted investor concern that the government would encourage drug makers to lower prices

In addition, the government has promoted traditional Chinese medicine and added new safeguards to address both the affordability and quality challenges. The Chinese government considers pharmaceuticals a strategic industry capable of global leadership.

Mirroring the government’s activities, Chinese consumers are becoming more assertive about their healthcare needs, turning to over-the-counter medication and TCM to take control of their healthcare and increase affordability. Aligned with an overall trend to premiumization, people are willing to pay for branded drugs, over generics, if they can afford them.